UNITED STATES OF AMERICA

BEFORE THE FEDERAL TRADE COMMISSION

OFFICE OF ADMINISTRATIVE LAW JUDGES

In the Matter of )
)
TELEBRANDS CORP., )
a corporation, )
)
TV SAVINGS, LLC, )
A limited liability company, and ) Docket No. 9313
)
AJIT KHUBANI, )
Individually and as president of )
Telebrands Corp. and sole member )
of TV Savings, LLC. )
__________________________________________)

RESPONDENTS' MEMORANDUM IN OPPOSITION TO

COMPLAINT COUNSEL'S MOTION TO RECONSIDER
ORDER DENYING COMPLAINT COUNSEL'S MOTION TO
COMPEL, OR TO CERTIFY ORDER FOR INTERLOCUTORY APPEAL

Preliminary Statement

Respondents Telebrands Corporation, TV Savings, LLC and Ajit Khubani submit

the following memorandum in opposition to Complaint Counsel's motion for

reconsideration of this Court's February 25, 2004 Order denying Complaint Counsel's

motion to compel responses to certain discovery requests related exclusively to

advertising disseminated in foreign countries to foreign consumers.

Having failed in its previously filed motion to compel, Complaint Counsel raises

the same facts and the exact same arguments a second . Complaint Counsel's motion

fails to meet the standard required for reconsideration because it fails to raise new issues

of fact or law, fails to demonstrate that this Court failed to consider any material fact, and

fails to demonstrate any manifest injustice or clear error. In re Rambus, Docket No. 9302

DC2/529018 1
(March 26, 2003)(citing Regency Communications, Inc. v. Cleartel Communications,

Inc., 212 F. Supp. 2d 1, 3 (D.D.C. 2002)). Indeed, Complaint Counsel's new motion

simply revisits the facts previously cited and repackages the exact same arguments

previously advanced in the first motion. Moreover, Complaint Counsel has provided this

Court with no reason to find that clear error exists in the Court's Order, or that manifest

injustice would result from the decision to deny Complaint Counsel's motion to compel.

At bottom, the error cited is the Court's disagreement with Complaint Counsel's

argument; the manifest injustice cited is the Court's refusal to see it Complaint Counsel's

way. Because these are insufficient reasons for this Court to reverse its decision, the

motion for reconsideration should be denied.

Complaint Counsels alternative argument that the February 25, 2004 Order

should be certified for interlocutory appeal should also be denied. The narrow, limited

issue related to foreign advertising and foreign sales to foreign consumers is at heart a

discovery issue, and the Commission has expressed its abiding skepticism that such

issues are appropriate for interlocutory appeal. Complaint Counsel has also failed to

show that the issue is one involving a controlling question that would determine a wide

spectrum of cases, let alone this case. Moreover, because the Order raises no substantial

grounds for differences of opinion, and because this matter may be addressed on final

review, the standards for certifying an order for interlocutory appeal have simply not

been met. Consequently, Complaint Counsels alternative application for certification

should be denied.

DC2/529018 2
 Argument

I. Complaint Counsel's Motion for Reconsideration Revisits the Same Facts

and Legal Arguments Previously Raised in the Motion to Compel and
Therefore Should be Denied.

Complaint Counsel's motion for reconsideration falls far short of the standard to

be met for reconsidering this Court's decision denying Complaint Counsel's motion to

compel. As Your Honor has stated:

Motions for reconsideration should be granted only sparingly. Karr v.

Castle, 768 F. Supp. 1087, 1090 (D. Del. 1991). Such motions should
be granted only where: (1) there has been an intervening change in
controlling law; (2) new evidence is available; or (3) there is a need to
correct clear error or manifest injustice. Regency Communications,
Inc. v. Cleartel Communications, Inc., 212 F. Supp. 2d 1 (D.D.C.
2002). Reconsideration motions are not intended to be opportunities
to take a second bite at the apple and relitigate previously decided
matters. Greenwald v. Orb Communications & Marketing, Inc., 2003
WL 660844, at *1 (S.D.N.Y. Feb. 27, 2003).

In re Rambus, Docket No. 9302 (March 26, 2003 Order Denying Respondents

Applications for Review of February 26, 2003, Order, etc.)(McGuire, Ch. J.). See also, In

re Intel Corporation, Docket No. 9288 (Order Denying Respondent Intel's Motion for

Reconsideration of Orders Denying Motions to Compel, entered March 2, 1999)

(Timony, J.). Complaint Counsel have failed to show that any of the standards for

reconsidering the Court's February 25, 2003 Order have been met. There have been no

changes in the law, no new evidence has been adduced, and the Court's decision does not

present a clear error or manifest injustice.

A. Complaint Counsel Does Not Cite Any Change in the Law to Justify
Reconsideration

Complaint Counsel has not cited any intervening changes in controlling law that

would warrant reconsideration. Indeed, in its present motion Complaint Counsel simply

DC2/529018 3
restates the jurisdictional arguments that were central to Complaint Counsel's motion to

compel. Instead of citing any new controlling or even persuasive law, the FTC largely

repeats its earlier arguments concerning FTC v. Skybiz, FTC v. Magui Publishing, Branch

v. FTC, Neiman v. Dryclean U.S.A. Franchise Co., and other previously cited cases.

The only thing "new" in Complaint Counsel's discussion of the law concerning

the FTC's jurisdiction over foreign commerce is its citation of the Prepared Statement of

the Federal Trade Commission on Cross-Border Fraud Before the Subcmte. on

Investigations of the Cmte. on Gov't Affairs, U.S. Senate (June 15, 2001) and a Letter

from Chairman Pitofsky to John Mogg, Director, European Commission (July 14, 2000).

These statements hardly constitute intervening changes in the law. More importantly, the

thrust of those statements are that the Federal Trade Commission's jurisdiction to enforce

the FTC Act is limited to the jurisdictional reach of the Act itself.1

These "new" citations of Commission statements (addressing the Telemarketing

Sales Rule and online privacy) do nothing to bolster Complaint Counsel's argument

which was raised in its motion to compel and is raised again in almost identical form in

the present motionregarding the issue at hand: the jurisdictional reach of the FTC Act

itself. Complaint Counsel's arguments on this issue are the same as those it advanced the
1
For example, the Prepared Statement acknowledges that the Commission may enforce
the Telemarketing Sales Rule "in the same manner, by the same means, and with the
same jurisdictionit has under the FTC Act." Prepared Statement, Attachment 4 to
Complaint Counsel's Motion, p. 2 (emphasis added). Complaint Counsel ignores the fact
that the Prepared Statement then goes on to acknowledge that there are significant
jurisdictional barriers to enforcing the Telemarketing Sales Rule as it relates to foreign
activities because of the limits of jurisdiction granted by Congress under the FTC Act
itself. Prepared Statement, Attachment 4, pp. 5 7. The statement by Chairman
Pitofsky cited by Complaint Counsel similarly recognizes the unremarkable point that
that the Commission's reach under the FTC Act is "co-extensive with the constitutional
power of Congress under the Commerce Clause" Letter, Attachment 5 to Complaint
Counsel's Motion, p. 8, n. 12.

DC2/529018 4
first time around: that the Court should be bound by FTC v. Skybiz and FTC v. Magui

Publishing (two cases that were not selected for publication by the courts that decided

them, thus limiting their authoritative or persuasive effect), among others, and should

ignore the decision of Neiman v. Dryclean U.S.A. Franchise Co., 178 F.3d 1126 (11th Cir.

1999). Complaint Counsel was incorrect then and is incorrect now that Neiman was

limited solely to the enforceability of the Franchise Rule. Complaint Counsel continues

to argue incorrectly that the central Neiman holdingthat the FTC Act does not

apply extraterritoriallyis merely dicta. This Court engaged in a lengthy discussion of

Neiman and each of the other cases cited by Complaint Counsel, and rejected the

arguments Complaint Counsel now advances -- again. (February 25, 2004 Order, pp. 2

3). Complaint Counsel's repackaged arguments concerning the state of the law on this

issue provide no basis for reconsideration.

B. Complaint Counsel Presents No New Evidence to Justify

Reconsideration

Just as it has provided this Court with no intervening change in controlling law,

Complaint Counsel also fails to identify any new evidence that would justify

reconsideration. Instead, Complaint Counsel raises this Court's so-called "failure" to

address each and every fact raised by Complaint Counsel in its motion to compel, and

implies that this must mean that the Court failed to consider those facts in reaching its

decision.

It is important to note at the outset that Complaint Counsel's motion for

reconsideration raises absolutely no new factual evidence. Complaint Counsel claims

that it has "adduced evidence" concerning Respondents' advertising in the United

Kingdom. But this is not "new" evidence at all. As demonstrated by Complaint

DC2/529018 5
Counsel's own motion to compel, Complaint Counsel was well-aware of the United

Kingdom advertising when it filed its motion to compel, and Complaint Counsel brought

the fact of such advertising to the attention of this Court in its motion to compel, provided

evidence of the advertising to the Court in the form of exhibits, and relied on that

advertising (which was directed to United Kingdom citizens to generate sales in the

United Kingdom) as the central factual point around which Complaint Counsel's

relevancy arguments were built. (Motion to Compel, filed as Attachment 2 to Motion for

Reconsideration, p. 3 and Exhibits G and H thereto). Consequently, the facts discussed in

Complaint Counsel's motion to reconsider are hardly "new evidence."

Because it has no new evidence to justify consideration, Complaint Counsel

instead argues that the Court "did not address these facts and issues of fact" in writing its

Order and Opinion. (Motion for Reconsideration, p. 4). Complaint Counsel's

implication, of course, is that Court did not consider the facts presented because it did not

address each fact and issue of fact presented in its Opinion. This argument is flawed for

several reasons.

First, the facts cited by Complaint Counsel in its motion for reconsideration were

put prominently before the Court by Complaint Counsel in its original motion to compel.

Indeed, the brunt of Complaint Counsel's relevancy arguments on page three of its

motion to compel was concerned with the advertising in the United Kingdom, and the

fact that it had been presented by Respondents to the Commissioners during meetings.

Complaint Counsel's implication that the Court somehow ignored these facts in reaching

its decision defies the reality that such facts were put front and center before the Court by

Complaint Counsel when it made the relevancy arguments.

DC2/529018 6
 Second, Complaint Counsel has cited absolutely no authority for the notion that

each and every fact considered by the Court must be described in the Opinion. Even if

Complaint Counsel were to identify case law to suggest that the facts considered by the

Court must be specifically identified, the plain reading of the Order indicates that the

Court considered evidence of the "[a]dvertisements disseminated abroad which were

never broadcast in the United States." (February 25, 2004 Order, p. 3). Indeed, the entire

weight of the Opinion on the issue of relevancy of the material sought indicates that the

Court considered the type of information sought by the discovery and the type of

information that would be obtained. The Opinion clearly reflects that the Court, after

considering such facts, correctly determined that such discoverywhich sought

information concerning advertisements in foreign countries to foreign consumers and

information related solely to the generation of foreign saleswas outside the scope of

permissible discovery.

Complaint Counsel's argument that the Court erred in identifying each and every

fact it considered has no basis in authority and defies the plain fact that the Court was

presented with, and considered, the facts identified by Complaint Counsel.

Consequently, Complaint Counsel provides no basis for reconsideration based on any

"evidentiary" issue.

C. Complaint Counsel Has Failed to Demonstrate any Clear Error or

Manifest Injustice in the Court's Order Denying Complaint Counsel's
Motion to Compel

Finally, Complaint Counsel has failed to identify any clear error in the Court's

Order, or show how the Court's Order results in a manifest injustice against Complaint

Counsel.

DC2/529018 7
 Complaint Counsel has previously recognized that the standard for clear error to

warrant reconsideration of an earlier decision is stringent. (Opposition to Motion for

Reconsideration filed by Complaint Counsel in In re Rambus, Docket No. 9302 (May 27,

2003)(citing Gindes v. United States, 740 F.2d 947, 950 (Fed. Cir.), cert. denied, 469

U.S. 1074 (1984)). As described by one court, [t]o be clearly erroneous, a decision must

strike [the court] as more than just maybe or probably wrong; it must . . . strike [it] as

wrong with the force of a five-week-old, unrefrigerated dead fish. Id. (citing Parts &

Elec. Motors, Inc. v. Sterling Elec., Inc., 866 F.2d 228, 233 (7th Cir. 1988), cert. denied,

493 U.S. 847 (1989)). To grant motions for reconsideration for lesser causes not only

wastes judicial resources, but is also unjust to the parties that have invested the time and

effort arguing on the original papers. First Options of Chicago, Inc. v. Kaplan, 198 B.R.

91, 92 (E.D. Pa. 1996).

Complaint Counsel cites no manifest example of clear error on the part of this

Court in denying Complaint Counsel's motion to compel. Complaint Counsel's argument

that error occurred is limited to a revisitation of its original arguments concerning Skybiz,

Magui Publishing, Neiman and other previously cited cases. At bottom, Complaint

Counsel's argument that error exists relies on the view that the Court misinterpreted

Neiman. For reasons discussed in the Order, and in Respondents' opposition to the

motion to compel, Complaint Counsel's reliance on Skybiz and Magui Publishing was

misplaced, and its reading of Neiman as having only addressed the enforceability of the

Franchise Rule was seriously misguided. A reading of the cases cited by Complaint

Counsel indicates that the weight of law coincided with this Court's view of the

jurisdictional reach of the FTC Act as set forth by the Eleventh Circuit and by the

DC2/529018 8
Supreme Court of the United States in several opinions. If there is manifest error here,

Complaint Counsel has not identified it.

With regard to "manifest injustice," Complaint Counsel makes much hay over the

fact that Respondents raised the United Kingdom advertising in meetings with

Commissioners during the investigation of Respondents by Complaint Counsel, and

argues that this "opened the door" to foreign advertising, thus transforming it into a

relevant area of inquiry. (Motion for Reconsideration, p. 4). Complaint Counsel

conveniently ignores that the Commissioners themselves, in those meetings with

Respondents attended by Complaint Counsel, dismissed the United Kingdom advertising

as being irrelevant to the Commission's investigation leading up to this action and the

decision whether to issue the Complaint.

Finally, Complaint Counsel is incorrect in stating that Respondents would "suffer

no prejudice" if the motion to compel was reconsidered and granted. (Motion for

Reconsideration, p. 12). Discovery in this matter closed on March 5, 2004. All of the

depositions have been taken by the parties and written discovery served and answered.

Dispositive motions are due on March 16, 2004 and motions in limine are due three

weeks later. This matter is set for final hearing beginning May 4, 2004. If the motion to

compel was reconsidered and granted, Respondents would be prejudiced in a variety of

ways. A whole new area of inquiry would be opened up. More importantly, the dates

scheduled for motions practice likely would be pushed off, as would the date for hearing.

Respondents note that all of this could have been avoided if Complaint Counsel had filed

their motion to compel earlier. Objections and responses to the first set of written

discovery were served on Complaint Counsel on December 12, 2003, six weeks before

DC2/529018 9
Complaint Counsel sought a meeting on these issues and long before the motion to

compel was filed. Complaint Counsel's statement that Respondents would suffer no

prejudice is flatly wrong.

II. The Court Should Not Certify this Discovery Matter for Interlocutory
Appeal to the Commission because the Standards for Certifying an Order for
Interlocutory Appeal Have Not Been Met.

As an alternative to its motion for reconsideration, Complaint Counsel requests

that his Court certify its discovery order for interlocutory review by the Commission

pursuant to Commission Rule 3.23(b), 16 C.F.R. 3.23(b). Complaint Counsels

application for interlocutory review of the Courts ruling may be made only if the

applicant meets both prongs of a two-prong test. In re Rambus, Docket No. 9302 (Order

Denying Respondents Application, March 26, 2003)(McGuire, J.). The first prong is

that the ruling must involve a controlling question of law or policy as to which there is a

substantial ground for difference of opinion. Id. (citing 16 C.F.R. 3.23(b)).

Controlling questions are not equivalent to merely a question of law which is

determinative of a case at hand. To the contrary, such a question is deemed controlling

only if it may contribute to the determination, at an early stage, of a wide spectrum of

cases. Id. (citing In re Automotive Breakthrough Sciences, Inc., 1996 FTC LEXIS 478

at *1 (Nov. 5, 1996)). See also, In re BASF Wyandotte Corp., 1979 FTC LEXIS 77, *2

(Nov. 20, 1979)(citations omitted)("The question is not whether interlocutory review

would resolve an 'intellectually intriguing' issue, the early determination of which 'would

save ... considerable trouble and expense."').

The second prong is that the Court must determine that an immediate appeal

from the ruling may materially advance the ultimate termination of the litigation or [that]

DC2/529018 10
subsequent review will be an inadequate remedy. In re Rambus, Docket No. 9302

(Ordering Denying Respondent's Application, March 26, 2003)(McGuire, Ch. J.)(citing

16 C.F.R. 3.23(b)). In addition, for discovery orders such as the Courts February 25,

2004 Order, the Commission generally disfavor[s] interlocutory appeals, particularly

those seeking Commission review of an ALJs discovery rulings. Id. (citing In re

Gillette Co., 98 F.T.C. 875, 875 1981 LEXIS 2, *1 (Dec. 1, 1981)). Interlocutory

appeals from discovery rulings merit a particularly skeptical reception, because [they are]

particularly suited for resolution by the administrative law judge on the scene and

particularly conducive to repetitive delay. Id. (citing In re Bristol-Myers Co., 90 F.T.C.

273, 273, 1977 FTC LEXIS 83, *1 (Oct. 7, 1977); In re Gillette Co., 98 F.T.C. at 875

(resolution of discovery issues, as a general matter, should be left to the discretion of the

ALJ.)).

The February 25, 2004 Order does not involve a controlling question of law or

policy. Complaint Counsel argues that the Order prevents Complaint Counsel from

reviewing foreign promotional materials and foreign sales information, and from

obtaining the names of foreign consumers. (Motion for Reconsideration, p. 14). Even if

Complaint Counsel is correct in its dramatic assertion that such information is probative

of hotly disputed issues, (Motion for Reconsideration at 14) the issues to which such

information relates (foreign sales and foreign advertising to foreign consumers) are not

central to any of the claims raised by Complaint Counsel in its Complaint. Determining

one way or the other the issue of whether Complaint Counsel is entitled to discover

information limited to the narrow areas of foreign sales and foreign advertising will not

DC2/529018 11
contribute to the determination, at an early stage, of a wide spectrum of cases.2 Indeed,

it would not even contribute to the determination of this case. The discovery question at

issue is therefore

not controlling, and the Order should not be certified for interlocutory appeal.3

Because the first prong of the standard for determining when an order should be

certified has not been met, consideration of the second prong is unnecessary. However,

an examination of the Order in light of the second prong reveals no basis for an

interlocutory appeal of this discovery matter.

The phrase substantial ground for difference of opinion requires a finding that

the question presents a novel or difficult legal issue. It is this unsettled state of the law

that creates a 'substantial ground for difference of opinion' and triggers certification." In

re Int'l Assoc. of Conf. Interpreters, 1995 FTC LEXIS 452, *4-5 (Feb. 15, 1995). As

discussed in the February 25, 2004 Order, this Court relied on settled precedent backed

by decisions of the Eleventh Circuit and the Supreme Court, not on a novel theory. The

fact that the Courts Order found a basis in federal court decisions tilts toward a finding

that there is no substantial ground for difference of opinion. In re Schering-Plough

2
Complaint Counsels statement that Respondents refusal to turn over those
documents invites the inference that the withheld material is not irrelevant defies logic.
Under Complaint Counsels reasoning, a patently irrelevant document request is deemed
relevant merely by the answering partys refusal to provide responsive documents. By
Complaint Counsels reasoning, no document requestno matter how unrelated to the
claims or defenses of a partyis objectionable as irrelevant. This makes no sense.
3
The argument that this discovery matter should be certified for interlocutory appeal
because it is a case of first impression, even if true, is beside the point because the
underlying issue is not a controlling question. If this was the standard, then every
discovery matter of first impressionwhether controlling or notwould be subject to
interlocutory appeal.

DC2/529018 12
Corporation, Docket No. 9297, 2002 WL 31433937, *4 (Order Denying Motion for

Certification, Feb. 12, 2002).

Finally, there is no evidence that subsequent review by the full Commission of the

Courts decision will be an inadequate remedy. Complaint Counsel asserts that by

denying it access to the documents requested, the Court is denying an opportunity to

preserve evidentiary questions for appeal. Complaint Counsel cites no legal authority for

its proposition, and ignores the fact that the Courts February 25, 2004 Order provides

Complaint Counsel with a basis for appeal, if it comes to that stage. Complaint

Counsels fear that [t]here is a risk that the issue would evade review (Motion for

Reconsideration, p. 15) is unsubstantiated.

Conclusion

For the foregoing reasons, Respondents respectfully request that the Court deny

Complaint Counsels motion for reconsideration of the Courts February 25, 2004 Order,

and deny Complaint Counsels alternative request that the Order be certified for

interlocutory appeal by the Commission.

_________________
Edward F. Glynn
Theodore W. Atkinson
VENABLE LLP
575 7th Street, N.W.
Washington, DC 20004-1601
(202) 344-8000

Attorneys for Respondents

Telebrands Corp., TV Savings, LLC,
and Ajit Khubani

Dated: March __, 2004

DC2/529018 13
 UNITED STATES OF AMERICA
BEFORE THE FEDERAL TRADE COMMISSION
OFFICE OF ADMINISTRATIVE LAW JUDGES

In the Matter of )
)
TELEBRANDS CORP., ) Docket No. 9313
a corporation, et al. )
__________________________________________)

ORDER DENYING COMPLAINT COUNSEL'S MOTION

FOR RECONSIDERATION OF ORDER DENYING MOTION
TO COMPEL, AND DENYING APPLICATION FOR
CERTIFICATION OF ORDER FOR INTERLOCUTORY APPEAL

WHEREAS, Complaint Counsel has filed its Motion to Reconsider Order

Denying Complaint Counsel's Motion to Compel, or to Certify Order for Interlocutory

Appeal ("Motion for Reconsideration and Application for Certification");

WHEREAS, I have considered both the Motion for Reconsideration and

Application for Certification and Respondents' Opposition to that motion;

WHEREAS, I find that Complaint Counsel failed to raise new issues of fact or

law or to show that this Court failed to consider any material fact;

WHEREAS, I find that Complaint Counsel failed to show that the February 25,

2004 Order denying Complaint Counsel's Motion to Compel contains any error or results

in manifest justice; and

WHEREAS, I find that the Order does not present a controlling question of law or

fact and does not present an issue about which there is a substantial difference of opinion;

and

WHEREAS, I find that Complaint Counsel has an adequate remedy available on

appeal after decision in this matter, it is hereby

 ORDERED that Complaint Counsel's Motion for Reconsideration and

Application for Certification is hereby DENIED.

ORDERED:

Date: ________________ _________________________________

Stephen J. McGuire
Chief Administrative Law Judge
 CERTIFICATE OF SERVICE

I hereby certify that on March __, 2004, pursuant to Federal Trade Commission
Rules of Practice 4.2(c) and 4.4(b), I caused the foregoing Opposition to Motion to
Compel to be filed and served as follows:

(1) an original and one (1) paper copy filed by hand delivery and an electronic
copy in Microsoft Word format filed by e-mail to:

Donald S. Clark, Secretary

Federal Trade Commission
600 Pennsylvania Avenue, N.W.
Rm. H-159
Washington, D.C. 20580
E-mail: secretary@ftc.gov

(2) one (1) paper copy served by hand delivery to:

The Honorable Stephen J. McGuire

Chief Administrative Law Judge
600 Pennsylvania Avenue, N.W.
Rm. H-112
Washington, D.C. 20580

(3) one (1) paper copy by first-class mail and by e-mail to:

Constance M. Vecellio, Esq.

Senior Counsel
600 Pennsylvania Avenue, N.W.
NJ-2115
Washington, D.C. 20580
cvecellio@ftc.gov

and

James Reilly Dolan

Assistant Director
Federal Trade Commission
601 New Jersey Avenue, N.W.
Washington, D.C. 20001
jdolan@ftc.gov

DC2/529018 14
 (4) one (1) copy each by e-mail to:

Walter Gross
600 Pennsylvania Avenue, N.W.
NJ-2127
Washington, D.C. 20580
wgross@ftc.gov

Amy Lloyd
600 Pennsylvania Avenue, N.W.
NJ-2260
Washington, D.C. 20580
alloyd@ftc.gov

Joshua Millard
600 Pennsylvania Avenue, N.W.
NJ-2127
Washington, D.C. 20580
jmillard@ftc.gov

I further certify that the electronic copy sent to the Secretary of the Commission is
a true and correct copy of the paper original, and that a paper copy with an original
signature is being filed with the Secretary of the Commission on the same day by other
means.

____________________________________
Theodore W. Atkinson, Esq.

DC2/529018 15